Insights

Insurance Companies Accelerate ETF Investments

Research from Greenwich Associates and State Street Global Advisors uncovers a surge in ETF adoption by insurance companies. What's driving the increased use of ETFs? Read the report to find out.


3 Key Takeaways

In a survey of US insurance companies, Greenwich Associates asked respondents about their use of exchange traded funds (ETFs) and found:

1    The majority of insurance companies use ETFs —and expect to increase usage in the future.

  • 62% of study participants invest in ETFs in their general accounts.
  • 61% of current ETF investors expect to increase their ETF allocations in the next three years.
  • 82% of non-users expect to reconsider investing in ETFs in the next three years.

2    Insurance companies’ use of fixed income ETFs has accelerated.

  • The April 2017 decision by the National Association of Insurance Commissioners (NAIC) to allow insurers to apply the bond-like accounting treatment of “systematic value” to fixed income ETFs appears to have been a catalyst for growth, with a 69% increase in fixed income ETF assets from 2016 to 2017.1
  • One third of insurers now use ETFs for core fixed income and modifying exposures; that share is expected to jump to 47% in the next three years.
  • 29% of respondents use ETFs to target specific opportunities, expected to increase to 42% in three years.

3    ETFs support a broad range of applications, across company size and type.

  • Life companies use more fixed income ETFs (83%); P&C companies use more equity ETFs (92%).
  • Smaller insurers primarily use ETFs as strategic allocations, whereas larger companies use ETFs for both strategic and tactical portfolio management.
  • The most common applications for ETFs are eliminate cash friction (47%), optimizing asset allocation (45%), core equity and beyond (42%), implementing liquidity sleeves (34%), core fixed income and modifying exposures (34%).

Want the full story?


Considering ETFs?

Resources to guide your decision making

NAIC Designations

Consult the SPDR® ETF Listing for Insurance Companies.


Systematic Value

Check our math on adjusting book value based on differences between forward looking cash flows and fund distributions.


Relevant SPDR ETFs

SPMB

NAIC 1

SPDR Portfolio Mortgage Backed Bond ETF

Provides low cost access to agency mortgage-backed pass-throughs guaranteed by GNMA, FNMA and Freddie Mac.

FLRN

NAIC 1

SPDR Bloomberg Barclays Investment Grade Floating Rate ETF

For short-term liquidity needs and potential risk mitigation, floating rate investment-grade notes may provide some yield, but at a lower duration risk than fixed rate exposures.


SPIB

NAIC 2

SPDR Portfolio Intermediate Term Corporate Bond ETF

Provides a more targeted exposure to the intermediate corporate bond segment by focusing on the 1-10 year maturity bucket.


SRLN

NAIC 4

SPDR Blackstone / GSO Senior Loan ETF

An actively managed senior loan portfolio that monitors credit quality rather than following a passive loan index that does not emphasize credit selection.


State Street Global Advisors

A leader in fixed income index investing:


Get More Information


1
Get in Touch

Contact us for more information.


2
Sign Up

Receive regular research and analysis.


3
Read More

Visit our Insights page to access our latest thinking.

Get in Touch

Contact us for more information.


Sign Up

Receive regular research and analysis.


Read More

Visit our Insights page to access our latest thinking.